Thursday, 6 August 2015

With equities on the slide, the VIX built solid gains across the day, settling +10.1% @ 13.77 (intra high 14.25). Near term outlook is for broad equity downside, at least to the sp'2050s, which should equate to VIX 15/16s. The key 20 threshold looks difficult, unless 2025/2000 zone.

VIX'60min

VIX'daily5

Summary

Suffice to add, the Wed' spike low/reversal candle has been confirmed with a strong net daily gain. Regardless of the Friday open, VIX looks set to close the week in the 15/16s.

*I remain long-VIX, seeking an exit in the 15/16s... 17/18s would be a bonus right now.

US equities closed broadly weak, sp -16pts @ 2083 (intra low 2075). The two leaders - Trans/R2K, settled lower by -0.8% and -1.3% respectively. Near term outlook is for a key break of the 200dma (2072), which should offer further downside to the 2050/40s.

sp'60min

Summary

... well, a day for the bears. :)
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I realise some will be looking for renewed upside tomorrow, but the weekly/monthly charts sure as hell don't support such a view.

Price structure on the smaller hourly cycle is a very clear bear flag, and is offering a Friday gap lower.. right into the 2060s. If so.. a weekly close in the 2050s looks probable.

US equity indexes are set to close lower, having confirmed the failed spike/rally seen on Wednesday. Regardless of the exact close, the setup greatly favours the equity bears into the weekly close... the only issue is whether the market will get a close under the 200dma tomorrow.

sp'daily5

VIX'daily3

Summary

Interesting day...

Price structure is a bear flag on the smaller 5/15min cycles.... renewed weakness into the close looks due.. not least as some of the rats might wish to exit ahead of the monthly jobs data.

After all.. if the jobs data is 'good news' tomorrow, that will heighten concerns about a rate hike.. .and few see that as bullish for the economy.
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US equities remain broadly weak, with an intra low of sp'2075 (with VIX 14.25). The bigger daily/weekly/monthly cycles continue to swing in favour of the equity bears, and lower lows look due tomorrow.. and into next week. Oil remains notably weak, -1.6% in the $44s.

sp'daily5

VIX'daily2

Summary

... not surprisingly, we're seeing some of the dip buyers appear. After all.. they believe a floor is in.. and the 200dma will hold.. as it did in the previous cycle.

US equity indexes continue to unravel, with the 200dma of sp'2072 in imminent danger of being broken, but more importantly... closed under today. VIX is reflecting increasing market concern, now in the 14s... 15s look a given.. whether late today.. or tomorrow.

sp'daily5

VIX'daily3

Summary

*Yesterdays spike floor/reversal on the VIX of 10.88 is being confirmed with strong upside today. A close in the 14/15s looks probable.
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Whether you want to count the current price action as some kind of sub'3 wave lower... what is clear, price momentum on the bigger daily/weekly.. and more importantly.. monthly cycles are turning more to the bears with each and every day.

Regardless of any minor bounce this afternoon.. or even an opening Friday gain, I am seeking the sp'2050/40s.. along with VIX 16/17s late tomorrow... or Monday.

US equities are seeing increasing weakness as the market has repeatedly failed to break/hold above the sp'2100 threshold. The VIX is starting to show some initial upside power... the 15s look due tomorrow. The ultimate issue now is whether the 200dma will be closed under tomorrow.. for a very bearish weekly close.

sp'daily5

VIX'daily2

Summary

*there is considerable upside potential on the VIX... the 15s look a relatively easy target tomorrow... 16/17s are possible.. if sp'2070s are lost.
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So.. the Monday low has been decisively taken out.. and we're now well on the way to a test of the 200dma.. currently @ 2072.

As I noted last nights Dow post, price structure sure ain't bullish, and indeed, is actually offering a very bearish H/S scenario.

Keep in mind, I've been babbling on about that scenario for a few months... not least as stocks like INTC offer an indirect signal of where the broader market was likely headed. Similarly.. AAPL and DIS are following.

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VIX update from Mr T.

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Very special note...

Dow, monthly'2, rainbow

The first red candle since Sept' 2011. Obvious target is the lower bollinger... around 16k.. by early October.
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US equities remain moderately weak, but clearly, the bears are still unable to build any significant.. and sustained downside. VIX is reflecting a touch of increasing market concern, back in the low teens. Commodities are mixed, Gold +$6, whilst Oil -1.5%.

Dow' daily

VIX'daily2, rainbow

Summary

* a notable green candle on the VIX chart... first resistance is the upper bol, which tomorrow will be around 15.00
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The Dow is lower for the sixth day, and the cheerleaders on clown finance TV are getting a little twichy about this index. First target remains the 17000 threshold.. which is only 2.5% or so lower
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notable weakness: DIS -3.7% in the $106s.

DISCA -1.5% in the $28s, continuing the severe decline from yesterday.. headed for 25/22.
GMCR -28% in the $53s
TSLA -8% in the $246s.

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time to cook... back soon.

11.35am.. Things are starting to get interesting.. sp'2082... VIX 14s due.. and its not even lunch time yet.

US equities open a touch higher, but there has been a clear opening reversal, with the sp' already breaking below the Wed' low of 2095. Despite repeated rally attempts, the bull maniacs look increasingly exhausted, and now it is merely a case whether the market will see a daily close under the 200dma (2072).

sp'daily5

VIX'daily3

Summary

*opening reversal candle on the VIX... seemingly headed for the 13s. 14s would be 'useful' for the bears today, and would open the door to much higher levels tomorrow.
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So.. we're off and running again... the 200dma is first target... although yes.. that looks out of range today. First real opportunity for that is tomorrow.. not least if the market decides 'good news is bad news'.

Q. Anyone wanna buy above sp'2100 ? Thats right... I didn't think so.

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meanwhile.. the destruction continues in Disneyland.

The mouse is going to be real pissed on a break under the giant $100 threshold. It seems the gap zone of 98/93 is going to be filled.

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Overnight China action: The Shanghai comp' was moderately weak across the day, settling -0.9% @ 3661. Talk continues about how much the China leadership will be able to hold a floor in stocks of around 3500/3300... with 'no selling allowed' until 4300/4600. I'm still open to the notion of a brief washout down to 2500... if correct, the communists will be most upset.

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Have a good Thursday
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8.32am.. weekly jobs.. 270k... a touch under consensus. It points to a strong Friday jobs number...and as ever.. will it be a case of 'good news is bad news'.... or 'good news IS good news'.

With the fifth consecutive net daily decline, the Dow remains a broken index. With component stocks like AAPL and DIS both seeing huge technical breaks, much lower levels still look due for broader market across the next 2-3 months.

Dow' daily

Dow' weekly1b

Summary

*regardless of whether you agree with the H/S scenario - as seen in chart 1b, the Dow has been broadly stuck since February. New highs (>18351) look difficult for the rest of the year.
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Suffice to add, this is the second consecutive week where we have been trading under the old bullish channel.

On any fair basis, the Dow has followed the Transports, and is now well into the process of rolling over. Primary downside target remains the 16500/000 zone.

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Looking ahead

Thursday will see the usual weekly jobs,

*market will clearly be more focused though, on the monthly jobs data.. due Friday (8.30am).
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US equities closed moderately mixed, sp +6pts @ 2099 (intra
high 2112). The two leaders - Trans/R2K, settled higher by 0.1% and
0.2% respectively. Near term outlook is uncertain after today's break
above resistance. Until there is a daily close under the 200dma in the
low 2070s, equity bears can't be overly confident.

A notable fifth consecutive net daily decline in the Dow, but then.. the declines are still very minor. Indeed, until the Dow gets near the big 17k threshold, the broader bearish outlook remains suspect.

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I (Permabear Doomster) am not a financial advisor as officially endorsed by any national government, corporation, financial/securities regulatory authority in neither the USA, UK, or any part of the world. None of the posts/comments in these pages are intended as trading/investment advice. They are merely my opinion on where a given market/stock and any other 'instrument, index, etc' may move at any future time.